OFFICIAL ADMINISTRATION AGREEMENT FO CONTRIBUTIONS, AS REPRESENTED BY THE C I ST FUNDS Single-DonorTrust Fundfor the SJt ' A and Reporting in the Countries of the EasternPartnership(STAREP) European Commission Trust Fund Number TFO72157 ContractNo. ENPI12014/337-995 Article 1 Subject Section 1.01. In pursuance of the Trust Funds and Cofinancing Framework Agreement between the European Union, represented by the European Commission (the "Commission"), and the International Bank for Reconstruction and Development ("IBRD"), the International Development Association ("IDA"), and the International Finance Corporation ("IFC") (collectively, the World Bank Group) dated March 20, 2009 (the "Framework Agreement"), the Commission hereby agrees to make available a Contribution for an amount referred to in Section 3.02, and to be administered by the IBRD for the Strengthening Auditing and Reporting in Countries of the Eastern Partnership (STAREP) (the "Project"). Section 1.02. The Contribution shall be used exclusively for the purposes set out in Annex I which includes a Description of the Project as well as, where required, the expenditures eligible for financing from the Commission, and the relevant indicators. Section 1.03. The IBRD shall administer the Contribution in accordance with the provisions of: - the Framework Agreement; - this Administration Agreement; - the attached General Conditions applicable to European Union Contributions to Trust Funds (the "General Conditions"). Section 1.04. The Contribution is not provided under Joint Management for all purposes of this Administration Agreement. Section 1.05. The Project is not a Multi-Donor Trust Fund for all purposes of this Administration Agreement. Section 1.06. The trust fund is not an Exceptionally large trust fund for the purposes of Section 16.03 of the General Conditions. Article 2 Entry into force and Implementation Period Section 2.01. This Administration Agreement shall enter into force when the last of the two Parties signs and will remain in force until the End Date. Section 2.02. Expenses financed under the Contribution must be incurred the date following that on which the last of the two parties signs. Section 2.03. It is expected that the Contribution will be fully utilized in accordance with the provisions of this Administration Agreement by April 30, 2018 ("End Disbursement Date"). I The End Disbursement Date can only be modified with the agreement of both Parties pursuant to Article 9 of the General Conditions. Section 2.04. The IBRD shall only disburse the Contribution for the purposes of this Administration Agreement after the End Disbursement Date with the prior written agreement of the Commission. Article 3 Amount of the Contribution Section 3.01. The budget of the trust fund is estimated to be EUR 1,000,000 as set out in Annex III. Section 3.02. The Commission undertakes to finance EUR one million (C1,000,000) for the trust fund. Section 3.03. Indirect Costs under this Administration Agreement shall not exceed 7% of the final amount of eligible Direct Costs of the Contribution. The IBRD may, following deposit of the Contribution by the Commission, deduct from each Contribution of the Commission and retain for the IBRD's own account an amount equal to 2% of the Contribution. In addition, staff costs for program management, preparation and supervision up to a maximum of 5% of the Contribution will be charged to the trust fund on an actual basis and as a Direct Cost provided they comply with Section 14.01 of the General Conditions. The final amount that the IBRD is entitled for Indirect Costs shall be adjusted to the actual disbursed amounts of the Contribution in accordance with Articles 14 and 17 of the General Conditions. Section 3.04. The following categories of costs shall be considered eligible under this Administration Agreement provided they comply with Section 14.01 of the General Conditions: (1) Staff costs, consultants fees (individual and firms), extended term consultants, and temporary support staff costs (2) Travel Expenses (3) Media workshop conference and meeting costs (4) Associated Overheads (5) Contractual services Article 4 Payment schedule and Reporting Section 4.01. Payments will be made in accordance with Article 15 of the General Conditions, and in accordance with the following payment schedule: Advance payment 50% EUR 500,000 Intermediate payment 40% EUR 400,000 2 (subject to the provisions of the General Conditions) Final payment 10% EUR 100,000 (subject to the provisions of the General Conditions) The Contribution funds shall be maintained in EUR. Section 4.02. Narrative progress report(s) and financial information shall be provided consistent with Article 2 of the General Conditions, and in accordance with the following schedule: - a narrative progress report shall accompany every request for a further instalment of financing. A final narrative report shall be forwarded to the Commission within six (6) months after the End Disbursement Date; - the progress financial information shall be made available via the Bank's Trust Funds Donor Center secure website following the signature of this Administration Agreement. The final financial information shall be made available via the Bank's Trust Funds Donor Center secure website within six (6) months after the End Disbursement Date. of Section 4.03. For the purposes of Section 2.03 of the General Conditions a schedule anticipatedactivities shall be provided with each report. Article 5 Communications and addresses shall state Any communication relating to this Administration Agreement shall be in writing, the number and title of the trust fund, and shall use the following addresses. account Payment requests and attached reports, including requests for changes to bank arrangements pursuant to Section 9.02 of the General Conditions, shall be sent to: For the Commission: Directorate General for Development and Cooperation - EuropeAid Unit F5 For the attention of Mr C. Komninos Office J-54 2/230 B-1049 Brussels Belgium be Copies of the documents referred to above, and correspondence of any other nature, shall sent to: Directorate General for Development and Cooperation - EuropeAid Unit F3 For the attention of Mr P. Mikos Office J-54 2/230 B-1049 Brussels Belgium For the IBRD: Centre for Financial Reporting Reform (CFRR) Europe and Central Asia Region 3 The World Bank For the attention of Mr Henri Fortin Praterstrasse 31 - 19th Floor A-1020 Vienna Austria Article 6 Annexes Section 6.01. The following documents are annexed to this Administration Agreement and form an integral part thereof: Annex 1: Description of the Project. Annex II: General Conditions applicable to European Union Contributions to Trust Funds. Annex Il: Indicative Budget for the Project of Section 6.02 In the event of a conflict between the provisions of the Annexes and those this Administration Agreement, the provisions of this Administration Agreement shall take II and those of the precedence. In the event of a conflict between the provisions of Annex other Annexes, the provisions of Annex 11 shall take precedence. Article 7 Other conditions applying to the Prqject Section 7.01. The measures taken to identify the European Union as the source of financing of the activities described in Annex I shall be those as per article 8 on Visibility and Participation of the Framework Agreement. This agreement is drawn up in three originals, two for the Commission and one for the World Bank Group entity. For the European Union, represented by For the International Bank for the Commission of the European Reconstruction and Development Communities Name: Philip Mikos Name: Samia Msadek Position: Position: Head of Unit F3 Acting Director, Strategy and Operations Directorate-General for Development and Director, Operational Services and Cooperation - EuropeAid Quality - Europe and Central Asia Region Signature: Signature: A Date: Date: 0 4 ANNEX I OF THE ADMINISTRATION AGREEMENT With a view to supporting an enabling environment for SME development, STAREP aims to build the capacity of relevant national stakeholders in Eastern Partnership countries to implement international standards in corporate financial reporting and related elements of the EU acquis communautaire. STAREP supports the development goal of improving the business climate through enhanced corporate financial reporting practices which provide investors, lenders and other users with accurate information for credit, business and other economic or administrative decisions. National stakeholders in corporate financial reporting and auditing include business organizations, policymakers, professional bodies, regulators, and academics, among others. Strong financial reporting systems help in several ways to create a business and investment climate which supports sustainable growth and reduces barriers facing businesses and small and medium enterprises (SMEs) in particular. Improved financial reporting opens new perspectives and opportunities for investments and credit activities, while underdeveloped practice and lack of sound financial information available to lenders and investors limits financial intermediation. Furthermore, improved financial reporting contributes to financial sector stability. However, lack of regulatory capacity limits effective supervision of banks, insurance companies and other financial institutions. The countries of the Eastern Partnership are faced with common challenges as they seek to the EU and its complete their transition to market economies and closer integration with internal market. The World Bank Centre for Financial Reporting Reform (CFFR) designed STAREP as a regional program, to help Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine - the six countries of the EU's Eastern Partnership (EAP) - design and carry out financial reporting reforms by drawing on the pool of shared experience and building capacity. STAREP assists the accounting and auditing profession, regulators, students and other stakeholders to develop and practice an institutional framework for corporate financial reporting which is in accordance with international accounting, auditing and accounting education standards. More specifically, STAREP aims to support the achievement of following outcomes: * A regulatory framework aligned with the EU acquis communautaire and international standards to foster an improved financial information flow targeted at the needs of SMEs in particular; * Improved application of international financial reporting and auditing standards, including through quality assurance systems, this building a credible information infrastructure that supports external financing especially for SMEs; * Enhanced capacity of financial reporting specialists to provide relevant business advice tailored to the needs of SMEs; * Increased capacity of relevant government agencies in regulating the accounting standards for their profession and in the application of international financial reporting specific purposes (e.g., tax and prudential regulations); * Enhanced capacity of the professional accounting organizations and the supporting network of institutions; 5 * Establishment and nurturing of long-term partnerships with, or memberships of, relevant EU and global peer organizations to achieve sustainability of the accounting education reforms. STAREP is based on a model of "peer learning" allowing participating countries to learn from the reform experiences of their fellow participants, helping them avoid problems that others have already faced. Although World Bank staff will play a major coordinating and technical assistance role, the structure of the STAREP, in particular its use of communities of practice, which brings together specialist practitioners in professional education, corporate financial reporting, and financial regulation from all the Eastern Partnership countries to exchange experiences, is designed to allow as many opportunities as possible for participants to learn from and together with their peers from experiences as well as expert input. STAREP puts a significant focus on regional activities mainly directed towards knowledge transfer and experience sharing, thus achieving significant economies of scale and allowing the countries to tackle issues shared regionally. In addition, STAREP provides country-level support, aimed at supporting institutional capacity building initiatives and reform implementation at the national level. The STAREP program is financed from the following two sources: this Trust Fund and an existing Multi- Donor Trust Fund (TF 071151). It is not excluded that additional funding may become available from other sources during the implementation of the STAREP program. Allocation of funding to the respective components is based on an annual planning and budgeting. The components of the STAREP Program are as follows: Component I - Reform Momentum and Support The objective of this component is to reinforce the accounting and audit reform momentum and regional cooperation trough a regular dialogue with ministers of finance and other senior officials to provide the ongoing strategic validation of the program, to present the latest developments in financial reporting regulation; and to offer the private sector, including foreign direct investors, an opportunity to provide feedback on the issues they face. Expected outputs include a series of video conferences, high-level ministerial conferences, associated technical workshops, EU level/international discussions, advice on best practices, periodic meetings of senior officials, regular information sharing on new developments, experiences of the participants in reform implementation, and an online information portal for corporate financial reporting reform. Component 2 -Accounting Education Reform The objective of this component is to promote the development of accounting education aligned with International Accounting Education Standards and the educational requirements of the EU's Statutory Audit Directive (i) at university level; (ii) for professional qualification; (iii) for continuing professional development of those already qualified. The component supports the identification and replication of the experiences of EU universities in accounting education and the mentoring of a community of practice with regard to the development of identified common approaches and solutions to the shared challenges, as well as facilitate collaboration with EU and relevant global peer institutions and bodies. Expected outputs include a series of regular video-conferences and technical workshops as well as occasional study visits and a regularly updated online information portal to mentor a community of practice that will help increase the capacity of participating institutions and to engage with their EU and global peers. 6 Component 3 -Accounting and Auditing Standards The objective of this component is to support the implementation of a framework for accounting and auditing that meets international standards. Key themes include the specific reporting needs of SMEs, the application of International Financial Reporting Standards (IFRS), the enforcement of financial reporting requirements, and the introduction of public oversight and quality assurance arrangements for statutory audit. The component provides technical assistance to the work of a community of practice, to address regional challenges in the accounting and auditing particularly financial reporting needs of SMEs, application of IRS, enforcement of financial reporting requirements, and the introduction of public oversight and quality assurance arrangements for the statutory audit function. Activities include: peer learning and joint learning seminars and workshops regarding good international practice and EU corporate financial reporting framework, facilitating knowledge sharing and transfer; promoting appropriate and sustainable partnership with relevant and global bodies (e.g., the European Commission, International Accounting Standards Board (IASB), WRS Foundation, European Financial Reporting Advisory Group (EFRAG), and F6d6ration des Experts Comptables Europ6ens (FEE)), between universities and professional accountancy organizations at the national level, with peers regionally, as well as with EU institutions; provision of analytical and research support and similar type of activities. Expected outputs include a series of regular video-conferences and technical workshops as well as occasional study visits and a regularly updated online information portal to mentor a community of practice that will help increase the capacity of participating institutions and to engage with their EU and global peers. Component 4 - Financial Sector Practice Forum The objective of this component is to provide support to financial sector regulators to help them understand the information provided in IFRS financial statements, including disclosures requirements under IFRS, prepared by the banks, insurance companies, and listed companies they regulate to improve the supervision of regulated companies. The activities include capacity building and knowledge sharing to enable financial regulators understand the ongoing modifications to the standards on financial instruments and insurance contracts by the IASB, as well as their impact on regulated companies and their capital base. Expected outputs include the organization of a Financial Sector Practice Forum which will aim at enhancing the knowledge of financial sector supervisors of IFRS, so they can better read financial statements prepared under these standards, monitor effectively the application of IFRS, and source information necessary to discharge their supervisory duties. Additional focus will be given to discussing a range of adjustments to capital, known as prudential filters recommended by regulators such as the European Banking Authority. Regional activities include LFRS training and exchanges of experience with other supervisors achieved through video conferences and face to face workshops. Component 5 - Country-level Implementation Support Complementary to the peer-learning activities, the objective of this component is to support the implementation of country-specific reform and provide on the ground technical assistance. Activities under this component will be tailored to individual country needs and will, if available, complement existing national technical assistance programs. 7 Expected outputs include to link national reform efforts with regional knowledge sharing activities; help desk assistance and follow up on national reform efforts carried out under national reform projects; policy advice and strategic guidance on financial reporting reform at the national level including proposals to update legislation, strengthen accountancy education, accounting standard setting, financial sector regulatory capacity, to improve audit oversight and quality assurance systems, and to strengthen the public registry of financial statements. Implementation Arrangements and Governance STAREP will be implemented by the Centre for Financial Reporting Reform (CFRR), a specialized unit of the World Bank within the ECA Operational Services and Quality department (Financial Management). In close and regular consultation with governments of the beneficiary countries, the Bank will drafts annual program plans which include a description of planned workshops and other activities, estimated time schedules and budgets. Progress reports reflecting on the program period will be drafted by the Bank on an annual basis. To discuss the program agenda and progress, biennial Ministerial Conferences in which Ministers of Finance or their representatives participate, are held. Furthermore, Senior Officials' meetings will be held annually and representatives of the Governments of the beneficiary countries will meet with the Bank to review progress of the program and to discuss and endorse the program agenda. Representatives of donors including the EC will be invited to join the Ministerial Conferences as well as the Senior Officials' meetings. In addition, representatives of donors will meet formally on an annual basis during the Donor Advisory Council to discuss in depth with the Bank progress made (taking into consideration the STAREP Program Working Document dated May 2013), work plans and issues. 8 ANNEX II OF THE ADMINISTRATION AGREEMENT GENERAL CONDITIONS APPLICABLE TO EUROPEAN UNION CONTRIBUTIONS TO TRUST FUNDS GENERAL PROVISIONS TO THE ADMINISTRATION AGREEMENT ARTICLE 1 General obligations of the World Bank Group entity Section 1.01. The World Bank Group entity may, according to the Description of the Project in Annex I, execute the funds directly or may provide them to a Recipient for execution in accordance with the World Bank Group entity's policies and procedures. Section 1.02. In case of a BETF, the World Bank Group entity shall carry out the Project in accordance with the Administration Agreement, including the Description of the Project contained in Annex 1, and in accordance with the World Bank Group entity's policies and procedures. The World Bank Group entity shall report on the indicators specified in the Description of the Project. Section 1.03. In case of a RETF, the World Bank Group entity shall be responsible, as administrator on behalf of the Commission, for making arrangements to ensure that the Contribution is used only for the purposes for which it was granted, with due attention to considerations of economy and efficiency. For this purpose, the World Bank Group entity shall monitor, evaluate, report and, where applicable, provide technical assistance, in accordance with the Administration Agreement, including the Description of the Project contained in Annex I, he Grant Agreement and the World Bank Group entity's policies and procedures. The World Bank Group entity shall report on the Indicators specified in the Description of the Project. The World Bank Group entity shall enter into a Grant Agreement with the Recipient for the provision of such funds to the Recipient for the purposes set forth in the Administration Agreement. Grant Agreements may be entered into up to the maximum amount of the contributions that all donors including the European Union intend to make available in the Administration Agreement(s). The World Bank Group entity shall provide a copy of the Grant Agreement to the Commission. The World Bank Group entity shall be solely responsible for the administration of such Grant Agreement and shall carry out such administration in accordance with its applicable policies and procedures without prejudice to Section 1.06. Section 1.04. The World Bank Group entity will be responsible only for performing those functions specifically set forth in the Administration Agreement, in these General Conditions, unless agreed otherwise with the Commission, and in case of a Multi-Donor Trust Fund, of the relevant Resolution or the Standard Provisions or the Terms and Conditions, and will not be subject to any other duties or responsibilities to the Commission, including, without limitation, any duties or obligations that might otherwise apply to a fiduciary or trustee under general principles of trust or fiduciary law. Nothing in the Administration Agreement, in these General Conditions, and in case of a Multi-Donor Trust Fund, in the relevant Resolution or the Standard Provisions or the Terms and Conditions, will be considered a waiver of any privileges or immunities of the relevant World Bank Group entity under its Articles of Agreement or any applicable law, all of which are expressly reserved. 9 Section 1.05. The World Bank Group entity shall take measures to prevent irregularities, fraud, corruption or any other illegal activity in the management of the Project in accordance with its policies and procedures. In accordance with applicable World Bank Group policies and procedures, including those pertaining to protection of confidential information and the integrity of the investigative process, the World Bank Group entity shall keep the Commission informed of the progress of any formal World Bank Group entity investigation concerning the misuse of funds provided under this Administration Agreement and will report to the Commission without delay the conclusions of such findings as well as measures taken to address the fraud and corruption consistent with its policies and procedures on anti-corruption. In accordance with the World Bank Group's policies and procedures, the World Bank Group entity shall, for BETFs, terminate contracts with Beneficiaries and, for RETFs, terminate the Grant Agreement or the financing to the Recipient for contracts with Beneficiaries, when either the Beneficiaries and/or the Recipient have been found by the World Bank Group entity to have been involved in fraud or corruption in connection with this trust fund financed by the Commission. In such cases, the World Bank Group entity shall apply its applicable policies and procedures in consultation with the donor(s) to recover the ineligible expenditures. Section 1.06. The World Bank Group entity undertakes to ensure that the principles set forth under Section 1.05, and Articles 4, 5, 6, 10, 14 and 16 of these General Conditions also apply to the Recipient and, where applicable, to Beneficiaries involved. The World Bank Group entity shall indicate to the Recipient in the Grant Agreement the possibility that the Commission may adopt measures vis-h-vis the Recipient, should the latter not reimburse the World Bank Group entity under Section 1.05. ARTICLE 2 Obligations regarding financial information and narrative reports Section 2.01. The World Bank Group entity shall provide the Commission with information on the progress and results of the Projects financed under the Contribution. To that end the World Bank Group entity shall prepare narrative progress report(s) and a final report containing information set forth in Section 2.03 and 2.04. The World Bank Group will also provide the Commission with progress and final financial information regarding the Project. The narrative report(s) as well as the financial information shall cover the entire Project described in the Administration Agreement regardless of whether or not the Project is entirely financed by the Commission. Section 2.02. The World Bank Group entity shall send to the Commission narrative progress report(s) and make available progress financial information in accordance with the provisions below. Every report and information shall include all Project activities for the period covered. The financial information will be made available via the Bank's Trust Funds Donor Center secure website. Section 2.03. The narrative progress report(s) shall provide for comparison of the objective(s) of the trust fund, the results expected and obtained and the budget details for the Project. The level of detail in the narrative report(s) should match that of the Description of the Project and of the indicative budget of the Project. 10 The narrative reports should include: - Summary and context of the Project; - Activities carried out during the reporting period (i.e. directly related to the description of the Project and activities foreseen in this Administration Agreement, including information on the measures taken to identify the European Union as source of financing); - Difficulties encountered and measures taken to overcome challenges; - Changes introduced in implementation, including changes in the procurement plan pursuant to Section 10.01; - Achievements/results by using indicators specified in the Description of the Project contained in Annex 1; - Work plan or schedule of Project activities (as described in the Administration Agreement) for the following period. If the report is sent after the end of the period covered by the preceding work plan or schedule, a provisional work plan or schedule shall be submitted before the end of the period covered by the preceding work plan or schedule. The progress financial information shall provide for a history of contributions received and the expenditures. It shall allow the Commission to assess whether the incurred expenditures generally comply with the Administration Agreement. Section 2.04. The final narrative report shall contain the above information (excluding the future workplan or schedule of Project activities) covering the entire Project implementation, of information on the visibility measures taken to identify the European Union as a/the source financing, details on the transfers of assets mentioned in Section 7.02 if relevant, and information on the final procurement plan mentioned in Section 10.01. The final financial It information shall provide for a history of the contributions received and the expenditures. shall allow the Commission to assess whether the incurred expenditures generally comply with the Administration Agreement. Section 2.05. The reports shall be presented in English. Section 2.06. The narrative progress report(s) shall be submitted at the following intervals: if payments follow option I of Section 15.01 of these General Conditions: - a narrative progress report shall be forwarded to the Commission on an annual basis following the signature of the Administration Agreement. - a final report shall be forwarded to the Commission within six (6) months after the End Disbursement Date specified in Section 2.03 of the Administration Agreement. if payments follow option 2 of Section 15.01 of these General Conditions: - a narrative progress report shall accompany each payment request for a further instalment of financing ; - a final report shall be forwarded to the Commission within six (6) months after the End Disbursement Date specified in Section 2.03 of the Administration Agreement. Section 2.07. The progress financial information shall be made available pursuant to Section 2.02 following the signature of the Administration Agreement. The final financial information shall be made available pursuant to Section 2.02 within six (6) months after the 11 End Disbursement Date specified in Section 2.03 of the Administration Agreement without prejudice to the obligations set out in Section 16.06 of these General Conditions. Section 2.08. The Commission may request clarification on the narrative or financial information providing the reasons for the request. Such information shall be provided as soon as available but no later than forty-five days (45) days of the request. Section 2.09. In addition to the above mentioned reports, the World Bank Group entity will ensure that other reports, publications, press releases and updates, relevant to the Administration Agreement are communicated to the Commission promptly following their issuance. Other reports may be made available on the Donor Centre secure website. The Commission may request reasonable additional information on a case by case basis, providing the reasons for the request. Such information shall be supplied within forty-five days (45) days of the request and where applicable, the Commission will be provided the website address for the trust fund. The World Bank Group entity and the Commission will endeavour to promote close collaboration and exchange of information on the Project. Section 2.10. The World Bank Group entity shall promptly inform the Commission of any event which, in its opinion, interferes or threatens materially to delay or interfere with the successful implementation of any Project financed by the Contribution. ARTICLE 3 Liability Other than for failure to perform its obligations set forth in these General Conditions, in the Administration Agreement, and in the case of a Multi-Donor Trust Fund, in the relevant Resolution or the Standard Provisions or the Terms and Conditions, the Commission shall not under any circumstances whatever be liable for damages caused either to or by the World Bank Group entity or third parties, during the performance of the Administration Agreement. No claim can be submitted to the Commission for compensation or for restoration of any such damage or loss. The Commission will not be responsible for the activities of any person or third party engaged by the World Bank Group and/or the Recipient as a result of the Administration Agreement, nor will the Commission be liable for any costs incurred by the World Bank Group andlor the Recipient in terminating the engagement of any such person. ARTICLE 4 Conflict of interest The World Bank Group entity undertakes to take necessary precautions to avoid conflicts of interest in accordance with the applicable policies and procedures of the World Bank Group. ARTICLE 5 Disclosure The obligations on confidentiality and disclosure of information are included in Article 10 of the Framework Agreement. 12 ARTICLE 6 Visibility and Transparency Section 6.01. The measures taken to identify the European Union as a/the source of financing are subject to Article 8 and Attachment 4 of the Framework Agreement and will be specified in the Administration Agreement. Section 6.02. With due regard to the World Bank Group entity's applicable rules on confidentiality, security and protection of personal data, the obligations on publication of Beneficiaries shall be governed by Article 9 of the Framework Agreement. ARTICLE 7 Ownership/use of results and equipment Section 7.01. The relevant World Bank Group entity shall own all rights, title and interest to all industrial and intellectual property rights and materials used for and produced by a Project in relation to this Administration Agreement. However the World Bank Group hereby grants the Commission a non-exclusive right to use free of charge and as it sees fit any of these materials produced by a Project provided said use does not thereby breach existing industrial and intellectual property rights and the World Bank Group entity's policies and Article 5 of these General Conditions. Section 7.02. Unless otherwise agreed in the Administration Agreement the equipment, vehicles and supplies paid for by the Contribution shall be transferred to Recipients, local authorities or to the final recipients (excluding commercial contractors) of the activities financed by the trust fund by the end of the Project in accordance with World Bank Group policies on asset management. The documentary proof of those transfers shall be kept for verification along with the documents mentioned in Section 16.06. ARTICLE 8 Participation in Supervision of the Project Section 8.01. Representatives of the Commission shall be invited to participate in Supervision missions, when applicable, led by the World Bank Group entity relating to the Project financed under the Contribution. The World Bank Group entity shall keep the Commission informed of the findings of such missions and regularly provide the Commission with summaries of any reports resulting from such missions. Section 8.02. Notwithstanding the Commission's participation in a World Bank Group entity's Supervision mission, the Commission as a donor may wish to carry out Supervision missions independently at its own cost. Supervision missions by representatives of the Commission should be planned and carried out in a collaborative manner between the World the Bank Group entity's staff and the Commission's representatives, keeping in mind commitment of both to coordination and collaboration for the effective and efficient implementation of the Project included in the Administration Agreement. These missions are by to be planned ahead with reasonable notice and procedural matters are to be agreed upon advance. The mission will make a the Commission and by the World Bank Group entity in draft of its report available to the World Bank Group entity for comments prior to final issuance. 13 ARTICLE 9 Amendment of the Administration Agreement Section 9.01. Any modification of the Administration Agreement, including the Annexes thereto, shall be in writing in an amendment. The request for amendment shall be submitted by either the World Bank Group entity or the Commission one (1) month before the amendment is intended to enter into force, unless otherwise agreed by the World Bank Group entity and by the Commission. Section 9.02. Notwithstanding Section 9.01, changes of address and changes of bank account may simply be notified in writing to the Commission. Changes of bank account must be specified in the request for payment using a financial identification form. ARTICLE 10 Procurement and Grants Section 10.01. If parts of the Project are contracted by the World Bank Group, the relevant procurement plan will be specified in the Description of the Project. If it is not specified therein, the World Bank Group entity will present it to the Commission as soon as it is available. Section 10.02. Unless otherwise agreed by the Parties in writing, the procurement of any goods, works or services and the award of Grants to Beneficiaries by the World Bank Group entity or the Recipient in the context of the Project shall be carried out in accordance with the applicable policies and procedures adopted by the World Bank Group entity, as previously assessed by the Commission. The administration and enforcement of all provisions entered into between the World Bank Group entity and a third party that is financed by the trust fund shall be the responsibility solely of the World Bank Group entity and shall be carried out in accordance with its applicable procedures, except as otherwise specified in this Article 10 and Section 1.06. Without prejudice to the specific procedures and exceptions applied by the World Bank Group entity, the award of Grants to Beneficiaries shall apply the following principles: - No single Beneficiary may receive more than one Grant financed by the European Union for the same activity. For additional activities, a Beneficiary may receive supplemental Grants; - Grants may only cover costs incurred after the date on which the Grant contract with the Beneficiary enters into force; - No portion of any Grant shall be used to provide a direct profit out of the proceeds of the Grant to the Grant Beneficiary unless the objective of the Grant is to reinforce the financial capacity of the Beneficiary; and - Grants may not as a rule finance the entire cost of the activities carried out by the Beneficiary. Section 10.03. The origin of the goods and the nationality of the organisations, companies and experts selected for carrying out activities in the Project shall be determined in accordance with the World Bank Group entity's relevant rules. The World Bank Group entity's policies and procedures on procurement and Grants to Beneficiaries are untied. 14 Section 10.04. The World Bank Group entity shall take into consideration as provided for under the World Bank Group's policies and procedures the following or similar situations as factors for determining qualification or eligibility of: - Beneficiaries that are bankrupt or being wound up, are having their affairs administered by the courts, have entered into arrangement with creditors, have suspended business activities, are the subject of proceedings concerning those matters, or are in any analogous situation arising from a similar procedure provided for in national legislation or regulations; - Beneficiaries that have been convicted of an offence concerning their professional conduct by a judgment which has the force of resjudicata; - Beneficiaries that have been the subject of a judgment which has the force of res judicata for fraud, corruption involvement in a criminal organisation or any other illegal activity; - Beneficiaries that are guilty of misrepresentation in supplying the information required as a condition of participation in the procedure or fail to supply this information; - Beneficiaries that are subject to a conflict of interest. Section 10.05. The World Bank Group entity may be given access whatever its medium (written on paper or stored in electronic form) to the central exclusion database set up and operated by the Commission (the "Central Exclusion Database"). The foregoing shall be applied in accordance with the provisions that may be provided for in Attachment 5 of the Framework Agreement including any condition under which the World Bank Group would communicate to the Commission any judgment rendered after 1 January 2009 which has the force of res judicata for fraud, corruption, involvement in a criminal organization or any other illegal activity against a Beneficiary receiving funds from a trust fund financed by the European Union. ARTICLE 11 Suspension of the Administration Agreement Section 11.01. The World Bank Group entity may suspend implementation of all or part of the Project in accordance with its policies and procedures including when circumstances make it too difficult or dangerous to continue. It shall inform the Commission without delay and provide all the necessary details should a project be suspended. The Administration Agreement may be terminated in accordance with Section 12.01. If the Administration Agreement is not terminated, the World Bank Group entity shall endeavour to minimise the duration of the suspension and may resume implementation of the Project once the conditions allow, and shall inform the Commission accordingly. Section 11.02. Upon removal of the suspension, the implementation period of the Administration Agreement shall be automatically extended by an amount of time equivalent to the duration of the suspension. This is without prejudice to any amendments to the Administration Agreement which may be necessary to adapt the Project to the new implementing conditions. ARTICLE 12 Terimination of the Administration Agreement Section 12.01. If, at any time, either party believes that the purposes of the Administration it shall consult the other Agreement can no longer be effectively or appropriately carried out, 15 by party. The Administration Agreement may be terminated at the initiative of either party of the giving the other party three (3) months' prior written notice to cancel all or part is not Commission's pro rata share of any remaining balance of the Contribution funds that committed pursuant to any agreements entered into between the World Bank Group entity and any consultants and/or other third parties for the purposes of the Administration Agreement prior to the receipt of such notice, including the Grant Agreement[s]. The World Bank Group entity shall return such cancelled balance to the Commission including any investment income in accordance with Article 18. Section 12.02.Where the World Bank Group entity: - fails, without justification, to fulfil any of the obligations set out in Sections 1.02 and 1.03 incumbent on it, including the presentation of a final narrative report and/or making available final financial information within the deadlines laid down in Sections 2.06 and 2.07, after being given notice by letter to comply with those obligations, still fails to do so or to furnish a satisfactory explanation within thirty (30) days of sending of the letter; and, in case of narrative progress reports, after failing to provide, together with a satisfactory explanation, a summary of the state of the progress of the Project; - fails to comply with Section 1.05 or Article 4; to obtain the - provides false reports or makes false or incomplete statements Contribution provided for in the Administration Agreement; - commits financial irregularities or is guilty of grave professional misconduct; - undergoes legal, financial, technical or organisational change that is likely to the substantially affect negatively the Administration Agreement or to call into question decision by which a direct financial contribution is awarded to the World Bank Group by the Commission following a Call for proposals: may terminate After prior consultation with the World Bank Group entity the Commission partial the Administration Agreement. In that event the Commission may request full or repayment of any amounts that should have not been considered eligible, after allowing the World Bank Group entity to submit its observations. Section 12.03. Prior to or instead of terminating the Administration Agreement as provided for in Section 12.02, the Commission may suspend payments or (exceptionally) the eligibility of expenses as a precautionary measure, informing the World Bank Group entity immediately. Section 12.04 This Administration Agreement shall be automatically terminated if no of its signature. payment has been made by the Commission within three (3) years ARTICLE 13 Dispute resolution Section 13.01. The Parties shall endeavour to settle amicably any dispute or complaint relating to the interpretation, application or fulfilment of the Administration Agreement, including its existence, validity or termination. In default of amicable settlement, any party may refer the matter to arbitration in accordance with the Permanent Court of Arbitration Optional Rules for Arbitration Involving International Organisations and States in force at the date of the Administration Agreement. 16 Section 13.02. The language to be used in the arbitral proceedings shall be English. The appointing authority shall be the Secretary General of the Permanent Court of Arbitration following a written request submitted by any party. The Arbitrator's decision shall be binding on all parties to the arbitral proceedings and there shall be no appeal. Section 13.03. Nothing in the Administration Agreement shall be interpreted as a waiver of any privileges or immunities accorded to any party hereto by its constituent documents or international law. FINANCIAL PROVISIONS TO THE ADMINISTRATION AGREEMENT ARTICLE 14 Eligible costs Section 14.01. To be considered eligible as Direct Costs under the Administration Agreement costs must: - be necessary for carrying out the activities financed by the trust fund, fall within the scope of the Administration Agreement, and comply with the principles of sound financial management, in particular value for money and cost effectiveness; - have actually been incurred after the date specified in Section 2.02 of the Administration Agreement and before the End Disbursement Date specified in Section 2.03 of the Administration Agreement; - be recorded in the World Bank Group or Recipient's accounts, be identifiable, backed by originals of supporting evidence and verifiable pursuant to the provisions on the verification provision set out in Section 16.07. Section 14.02. Subject to the above and without prejudice to Section 14.04, the following Direct Costs related to the activities of the trust fund of the World Bank Group entity, or its Recipient may be eligible provided they are consistent with the World Bank Group entity's policies: - the cost of staff, including those at headquarters, assigned to the activities funded by the trust fund, corresponding to salaries and other benefits costs; - travel and subsistence costs for staff and consultants; - cost of purchase or lease for goods and services (including consultant services, transport, storage and distributing, lease of equipment, etc.); - costs directly arising out of, or related to, distributing consumables, supplies and communications; - expenditure on contracting (including works); - the proportion of field office costs that corresponds to the amount of activity directly attributable to the activities financed by the trust fund or to the proportion of the amount deposited by the European Union; - media workshops, conferences, meetings and other costs including dissemination of information, translation, reproduction, publication; - training; - Supervision/project management activities, project preparation activities, and specific reporting for the needs of the Commission; 17 - financial service costs (in particular bank fees for transfers) and insurance; - costs related to carrying out visibility activities. Section 14.03.The following costs of the World Bank Group entity or its Recipient shall not be considered eligible: - expenditures and provisions for possible future losses or debts; - interest owed to any third party; - items already financed from other sources; - purchases of land or buildings; - currency exchange losses; - taxes, duties and charges (unless the World Bank Group entity or the Recipient is not able to reclaim them and if allowed by the applicable regulatory provisions of the European Union). Section 14.04.In order to assist in the defrayment of the costs of administration and other expenses incurred by the World Bank Group entity in administering the trust funds provided to it hereunder, a fixed percentage of Direct Costs, not exceeding 7%, may be deducted from each Contribution and retained as Indirect Costs by the World Bank Group entity. The 7% includes any set up fee that the World Bank governing bodies' decision may establish. Indirect Costs are eligible provided that they do not include Direct Costs specifically charged including preparation and supervision costs. Where the administrative costs charged by the World Bank Group exceed 7%, the World Bank Group entity may recover the balance as Direct Costs, subject to meeting thc requirements governing direct eligible costs referred to in Section 14.01. Indirect Costs shall not be eligible where the Administration Agreement concerns the financing of a Project where the World Bank Group entity is already receiving funding for its functioning from the European Union during the same period in question. ARTICLE 15 Payments Section 15.01. Payment schedule is set out in Article 4 of the Administration Agreement and follow one of the options below. - Option 1 will be applicable in case of Single Donor Trust Funds or Multi-Donor Trust Funds where the trust fund has an anticipated duration of one year or less: An advance payment, representing 100% of the total Contribution referred to in Section 3.02 of the Administration Agreement shall be payable by the Counission within forty-five (45) days following receipt of the Administration Agreement signed by both Parties and receipt by the Commission of a payment request conforming to the model agreed between the Parties. - Option 2 will be applicable in case of Single Donor Trust Funds or Multi-Donor Trust Funds where the trust fund has an anticipated duration of more than one year: An advance payment representing 50% of the total Contribution referred to in Section 3.02 of the Administration Agreement shall be payable within forty-five (45) days following receipt of the Administration Agreement signed by both Parties and receipt 18 by the Commission of a payment request conforming to the model agreed between the Parties. One or several intermediate payments representing X% of the total Contribution referred to in Section 3.02 of the Administration Agreement and specified in Section 4.01 of the Administration Agreement, shall be payable within forty-five (45) days of approving the narrative progress report and the financial information provided the payment request is accompanied by written confirmation that 50% of the total funds received to-date by the trust fund have been subject to a Commitment. A final payment representing 100-(50 + X)% of the total Contribution referred to in Section 3.02 of the Administration Agreement and specified in Section 4.01 of the Administration Agreement, shall be payable within forty-five (45) days following receipt by the Commission of a payment request accompanied by written confirmation that (50 +X)% of the total funds received to-date by the trust fund have been subject to a Commitment. Section 15.02. Narrative progress reports and the up to date financial information shall be deemed approved if the Commission has not reacted within forty-five (45) days of receiving the narrative progress report. If the Commission does not intend to approve a narrative report and/or financial information, as submitted or made available, it shall revert to the World Bank Group entity specifying the additional information it requires in accordance with Section 2.08. The deadline for approving the narrative report and financial information shall be suspended pending the receipt of the requested information. If the Commission deems that a payment request cannot be met, it shall revert to the World Bank Group entity with a request specifying the additional information it requires within the forty-five (45)-day payment period. The payment period shall be suspended pending the payment request being made available in accordance with Section 15.01. completeness Approval of a report does not imply recognition of the regularity, authenticity, and correctness of the declarations and information contained therein. Section 15.03.All payments shall be made in Euro, to the following bank account: Bank of America NT and SA Main Branch P.O. Box 407 1 Alie Street London El 8DE United Kingdom Swift Bic Code: BOFAGB22 Account Number: 165050-62952017 lBAN Number: GB37BOFAl6505062952017 Or to any other bank account pursuant to Section 9.02. When making deposits pursuant to this Section 15.03, the Commission will instruct the bank with which the deposit is made to include in its payment details information (remittance advice) field of its SWIFT payment message information indicating the amount and date of the deposit, the name and World Bank reference number of the trust fund for which the deposit is made (as set forth in the Administration Agreement), the Commission internal 19 for reference number (as set forth in the Administration Agreement), name of the project for the trust which the funds are intended, name of the Commission's department responsible will also send a fund, date of the Administration Agreement or amendment. The Commission via e-mail using address copy of its instruction to the IBRD's Trust Funds Division "TFremitadvice@worldbank.org or via fax utilizing fax number 1-202-614-1315. Section 15.04. In case of Single Donor Trust Funds except as the Commission and the World Bank Group entity may otherwise agree and subject to Section 15.06, any funds so deposited Funds, in the by the Commission shall be maintained in Euro. In case of Multi-Donor Trust event that holding currency of the Multi-Donor Trust Fund is not Euro, the World Bank Group entity, shall convert the funds into the holding currency of the trust fund promptly been following receipt of the funds, provided that all the necessary documentation has World Bank Group on the date of the received, at the exchange rate applicable to the conversion unless the parties agree otherwise in Section 7.02 of the Administration to complete the Agreement. In all cases, where the Contribution proves to be insufficient Project as a result of an exchange rate fluctuation, the Commission will not bear any responsibility for additional financing. Section 15.05. The funds deposited pursuant to Section 15.04 above may be commingled with other trust fund assets administered by any World Bank Group entity, provided they may still be identified as such in the records of the World Bank Group entity but shall be kept Group entities. separate and apart from the funds of each of the World Bank for Section 15.06. The World Bank Group entity may exchange any funds held hereunder other currencies in order to facilitate their administration and disbursement at the exchange parties rate applicable to the World Bank Group on the date of the conversion unless the agree otherwise in Section 7.02 of the Administration Agreement. the Section 15.07.IBRD shall, on behalf of the World Bank Group entity, invest and reinvest funds provided by the European Union hereunder pending their disbursement, in accordance with IBRD's policies and procedures for the investment of trust funds. For Multi Donor Trust Funds and/or Joint Management, IBRD shall credit all income earned on funds received this from the Commission from such investment to the trust fund established under Administration Agreement to be used for the same purposes as the Contribution funds. For Contributions which are not Multi-Donor Trust Funds and/or Joint Management, investment income earned on funds received from the Commission shall be identified as such, and LBRD shall credit such income to the Commission's Donor Balance Account to be reimbursed to the Commission annually upon receipt by IBRD of banking details and authorized instructions from the Commission. Such refund request shall be sent to the attention of the Division Manager, Trust Fund Division, Accounting Department of the World Bank ARTICLE 16 Financial audits and checks Section 16.01. The World Bank Group shall maintain separate records and ledger accounts in respect of the Contributions deposited by the Commission in the trust fund account and disbursements made therefrom. Separate records and ledger accounts shall be kept for each trust fund. Section 16.02.The World Bank Group shall provide to the Commission, within six (6) months following the end of each World Bank Group fiscal year. the annual single audit, comprising (1) a management assertion together with an attestation from the World Bank 20 over cash-based Group's external auditors conceming the adequacy of internal control statement for all financial reporting for trust funds as a whole; and (2) a combined financial The cost of the cash-based trust funds together with the external auditor's opinion thereon. single audit shall be borne by the World Bank Group. audit is Section 16.03. For Exceptionally large trust funds where a financial statement provisions in the deemed appropriate and necessary, the World Bank will include be audited (either Administration Agreement for the financial statements of the trust fund to trust fund as agreed with the donor(s)), by annually, periodically, or at the completion of the Report. The costs with the World Bank's external auditors in addition to the Single Audit statements will respect to such audits will be paid by the trust fund. These audited financial be submitted to the Commission. basis, a financial Section 16.04. If the Commission wishes to request, on an exceptional of a trust fund established under an statement audit by the Bank's external auditors one another as to Administration Agreement, the Commission and the Bank will first consult the Commission whether such an external audit is necessary. Following consultation, if will arrange for such an audit. The cost wishes to proceed with the external audit, the Bank an audit, will be paid by of any such audit, including the Bank's internal costs related to such the Commission. all financial statements Section 16.05.The Bank will provide the Commission with copies of pursuant to the Grant and auditors' reports received by the Bank from the Recipients Agreements. seven years after the End Section 16.06. The World Bank Group entity shall, until at least Disbursement Date of the Administration Agreement: the activities financed by the (i) keep financial and accounting documents conceming European Union hereunder; and upon request, all (ii) make available to the competent bodies of the European Union of accounts concerning the relevant financial information, including statements executed by project or activity financed by the European Union hereunder (whether such World Bank Group entity or by its subcontractor). regulations, the European Section 16.07. In conformity with the European Union financial checks related to the Projects and activities Union may undertake, including on-the-spot, financed by the trust fund. the verification provisions Section 16.08. The foregoing shall be applied in accordance with Agreement. provided for in Attachment 3 of the Framework ARTICLE 17 Final amount of the Contribution by the Commission the World Bank Group Section 17.01. The total amount to be paid by the Commission to by Section 3.02 of the entity may not exceed the maximum Contribution established the estimated total Administration Agreement, even if the overall actual expenditure exceeds unless amended in budget set out in Section 3.01 of the Administration Agreement accordance with Section 9.01. 21 be Section 17.02 The World Bank Group entity accepts that the Contribution amount shall limited to the amount required to balance income and expenditure for the Project and that it may not in any circumstances result in a surplus for the World Bank Group entity. Section 17.03. In cases where the Project is not completed by the End Disbursement Date unexpended specified in Section 2.03 of the Administration Agreement, the funds that remain after all Commitments incurred have been satisfied, including investment income will be reimbursed to the relevant Balance Account. Section 17.04. Where the Project is not carried out according to the Administration Agreement and without prejudice to its right to terminate the Administration Agreement pursuant to Section 12.02, the Commission may, after allowing the World Bank Group entity to submit its observations and without prejudice to Article 13, adjust its Contribution pro rata to the actual implementation of the Project on the terms laid down in the Administration Agreement giving three (3) months' prior written notice. ARTICLE 18 Recovery Section 18.01. Upon the completion or termination of the Project for which the European to the Union has provided funding hereunder, the World Bank Group entity, will refund Commission within forty-five (45) days of receiving a written request from the latter any amounts paid in excess of the final amount due for such project (including any investment income not previously reimbursed to the Commission or to the Balance Account). Such refund request with banking details and authorized instruction from the Commission shall be sent to the attention of the Division Manager, Trust Fund Division, Accounting unless Department of the World Bank. Any refund to the Commission will be done in Euro, the the Parties agree otherwise, at the exchange rate applicable to the World Bank Group on date of the conversion unless the Parties agree to another exchange rate in Section 7.02 of the Administration Agreement. In the event the funds are received by the Commission before such refund request is sent, the Commission will issue a refund request acknowledging their receipt. Section 18.02. If the World Bank Group entity fails to repay by the due date, the sum due shall bear interest in accordance with the rules of the Commission. In case of Contributions which are Multi-Donor Trust Funds and/or Joint Management the accrued investment income may be taken into account. Section 18.03. Amounts to be repaid to the Commission may be offset against amounts of any kind due to the World Bank Group entity or the Recipient, after consulting it accordingly. This shall not affect the Parties' option to agree on payment in instalments. Section 18.04. Bank charges incurred by the repayment of amounts due to the Commission shall be borne entirely by the World Bank Group entity. 22 ANNEX III INDICATIVE BUDGET Proposed Project Activities Indicative budget (Euros) Item Staff Costs, consultant fees 520,000 (individual and firms), extended term consultants, and temporary support staff costs Travel Expenses 80,000 Media workshop conference and 330,000 meeting costs Contractual services 0 Associated Overhead 50,000 Total amount 980,000 Bank Administration fee (2%) 20,000 Total 11000,000 23